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CASSIDY TURLEY RESEARCH

U.S. EMPLOYMENT TRACKER February 2014

Job Growth Lousy, But So Is The Weather

BLS Employment Report

By Rebecca Rockey, Economist, and Kevin Thorpe, Chief Economist, U.S. Research

January 2014

113,000

The economic climate in the U.S. has been as volatile as the weather over the past two months. Despite strong economic data as we entered 2014, extremely cold weather and market reactions have suddenly diminished the optimism of many.

Change in total nonfarm employment

34,000

Office-using

21,000

Manufacturing

-12,900

A huge focus over the last month has been on the weak December employment report. The Bureau of Labor Statistics (BLS) showed growth in total nonfarm employment of only 74,000, which has since been revised to 75,000. November, however, was revised from 241,000 to 273,000, indicating that job growth towards the end of the year was not only strong, but above the monthly average of 194,000 for the year. Today, BLS reports show that January’s job growth was 113,000, a modest improvement, despite having the coldest average monthly temperatures on record since 1994. Positive trends in construction offset the December decline of 22,000, showing an increase in January of 48,000. Manufacturing, residential and nonresidential building, wholesale trade, business and professional services, hospitality and health care sectors all posted improved job gains this past month. The national unemployment rate declined to 6.6%, from 6.7%.

Retail

Job Growth Revisions Change in Total Nonfarm Payrolls, 000’s

There is no question that the latest string of economic data - from housing to manufacturing to employment - has been lousy. But nearly all agree that abnormal weather is the primary factor behind the seemingly out-of-nowhere slowdown in the U.S. economy. The fact is, most data series are seasonally adjusted, meaning that they attempt to eliminate seasonal variances so that people can make month-to-month comparisons. When the weather falls into a “normal historical range,” the seasonal adjustments work well. When the weather is abnormal, such as the adverse conditions introduced by the polar vortex, the seasonal adjustments inevitably fail to account for the atypical pattern. In other words, the severe weather has placed an artificially negative slant on nearly all of the economic data released in December and January.

Dec 2013

Oct 2013

Nov 2013

Sep 2013

Jul 2013

Pre-revision

Aug 2013

Jun 2013

Apr 2013

May 2013

Mar 2013

Jan 2013

Feb 2013

350 300 250 200 150 100 50 0

Post-revision

Source: BLS

To cut through the seasonal distortions and spot the true underlying trend, it is instructive to view the data through the lens of a six-month moving average. Taking this approach, the U.S. economy is creating a monthly average of 178,000 net new jobs, consumer spending is growing at an annual rate of 3.1% and the ISM manufacturing index has been a robust 60.6. It’s also worth noting that the Federal Reserve was seemingly unfazed by December’s weak employment figures, as it continued to taper its asset purchasing program—an indication that the Fed believes the long-term fundamentals in the broader economy are getting stronger. In general, the economic backdrop still indicates that commercial real estate fundamentals will continue to tighten in most markets across the country.

Office-using Employment Surpassed pre-recession levels

29500 29000 28500 28000 27500

Office-using, ths, SA

Source: BLS

Dec 2013

May 2012

Oct 2010

Jan 2009

Apr 2007

Jul 2005

Dec 2003

27000

Looking ahead. While we remain cautious of shaky equity markets and the possibility that the latest economic data could be signaling some underlying weakness, we remain optimistic that the economic expansion will continue at a stronger growth rate in 2014. Indeed, a lot about this recovery still looks very right. In the past week, we learned after revisions that real GDP grew at an annualized rate of 3.2% in the final quarter of 2013, driven by the largest increase in consumer spending in three years. Business confidence is now at an 11-year high; consumer confidence has held up; fiscal policy is less of a drag; and the Fed is now tapering because it generally likes what it sees. Commercial real estate fundamentals have been consistently tightening for three straight years. Although the past few weeks have allowed some doubt to resurface, the outlook remains upbeat.

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CASSIDY TURLEY RESEARCH

U.S. EMPLOYMENT TRACKER Employment Situation by Metro: Total Nonfarm*

OfďŹ ce-Using*

Industrial Sector*

Unemployment

(000s)

% Chg

(000s)

% Chg

(000s)

% Chg

2013

Atlanta, GA

59.0

2.5%

24.7

3.8%

3.3

0.8%

8.0%

Austin, TX

26.9

3.3%

9.0

4.7%

1.9

1.8%

5.3%

Baltimore, MD

25.6

1.9%

10.9

3.7%

-0.4

-0.3%

7.0%

Boston, MA

37.2

1.5%

14.4

2.1%

-2.1

-0.6%

6.1%

Charlotte, NC

22.2

2.6%

6.8

2.9%

3.7

2.5%

8.5%

Chicago, IL

55.3

1.3%

30.2

2.7%

8.0

0.9%

9.2%

Cincinnati, OH

8.3

0.8%

5.4

2.3%

2.4

1.2%

7.0%

Columbus, OH

11.6

1.2%

3.0

1.2%

3.4

2.3%

6.1%

Dallas, TX

99.1

3.3%

37.4

4.7%

10.1

1.8%

6.1%

Dayton, OH

-1.0

-0.3%

0.9

1.3%

-0.7

-1.0%

7.5%

Denver, CO

34.3

2.8%

12.7

3.5%

2.6

1.5%

6.7%

Detroit, MI

11.0

0.6%

3.3

0.7%

10.5

2.9%

9.6%

Edison, NJ

15.5

1.5%

3.6

1.4%

2.2

1.4%

7.9%

Fort Lauderdale, FL

16.1

2.2%

2.1

1.1%

2.2

2.3%

5.9%

Houston, TX

95.5

3.5%

17.3

3.0%

19.0

3.7%

6.2%

Indianapolis, IN

15.7

1.7%

3.7

1.8%

0.3

0.2%

7.4%

Kansas City, MO

8.4

0.8%

5.8

2.2%

1.4

0.9%

6.4%

Las Vegas, NV

18.4

2.2%

3.9

2.5%

0.2

0.2%

9.5%

Los Angeles, CA

62.2

1.6%

29.4

3.0%

-3.9

-0.5%

9.9%

Louisville, KY

13.8

2.3%

2.9

2.3%

4.1

2.9%

7.9%

Miami, FL

9.7

0.9%

4.6

2.0%

1.8

1.0%

8.7%

Milwaukee, WI

4.9

0.6%

0.3

0.2%

-1.2

-0.7%

7.3%

Minneapolis, MN

39.9

2.3%

7.2

1.6%

3.2

1.0%

4.9%

Nashville, TN

26.5

3.4%

10.6

5.8%

5.6

4.0%

6.5%

New York, NY

142.5

1.7%

28.2

1.2%

1.3

0.1%

8.0%

Newark, NJ

12.4

1.3%

2.3

0.9%

-0.9

-0.5%

8.4%

Oakland, CA

11.4

1.2%

1.6

0.7%

1.9

1.2%

7.4%

Philadelphia, PA

26.8

1.0%

8.4

1.2%

-1.3

-0.3%

8.1%

Phoenix, AZ

41.7

2.4%

11.4

2.5%

5.0

1.9%

6.8%

Pittsburgh, PA

12.5

1.1%

8.2

3.1%

0.6

0.4%

6.9%

Portland, OR

17.1

1.7%

5.2

2.3%

3.9

1.9%

7.3%

Raleigh, NC

8.2

1.6%

3.7

2.6%

1.8

2.9%

6.9%

Sacramento, CA

9.8

1.2%

2.4

1.4%

2.8

3.5%

8.6%

San Diego, CA

22.7

1.8%

5.9

1.9%

0.5

0.3%

7.4%

San Francisco, CA

26.5

2.7%

12.2

3.5%

2.0

2.0%

5.5%

San Jose, CA

27.0

3.0%

13.3

5.0%

2.2

1.0%

6.9%

Seattle, WA

42.1

2.5%

7.9

1.9%

8.7

2.7%

5.9%

St. Louis, MO

9.4

0.7%

0.7

0.2%

1.3

0.6%

7.2%

Tampa, FL

36.8

3.2%

12.0

3.8%

-1.3

-1.0%

7.0%

Washington DC Metro

37.1

1.2%

6.0

0.8%

0.7

0.5%

5.5%

West Palm Beach, FL

9.2

1.8%

2.0

1.4%

-0.6

-1.2%

7.2%

*Employment change, 2012 over 2013 Source: BLS

2 | Cassidy Turley


CASSIDY TURLEY RESEARCH

U.S. EMPLOYMENT TRACKER Employment Indicators By Company Size

U.S. Jobs Lost/Gained

U.S. Nonfarm Private Sector Job Growth, 000’s

Recession vs. Recovery, 000’s

Small (1-490

160

Medium (50-499)

Large (500+)

Professional and business services

140

Leisure and hospitality

120

Retail trade

100

Manufacturing Transportation and utilities

80

Financial activities

60 40

Construction

20

Information

0

-2500 Nov-13

Dec-13

-1250

Jan-14

0

Jobs Lost

Source: ADP National Employment Report

1250

2500

Jobs Regained

Source: BLS

Unemployment vs. Office Vacancy

Job Openings Total Nonfarm, (SA Millions)

18%

11.0%

4 3.5

10.0% 17% 9.0%

3 2.5

16% 8.0%

2

Confidence Growing to Seek New Employment

Sep 2009

Quit Rate, Total Nonfarm (SA, %)

Continuing Claims (mil)

Source: Employment and Training Administration

Dec 2007

Jan 2014

Dec 2012

Jan 2012

2

Mar 2006

3

Jun 2004

4

Sep 2002

5

2.6 2.4 2.2 2 1.8 1.6 1.4 1.2 Dec 2000

6

695 645 595 545 495 445 395 345 295 245 Mar 2011

Nov 2013

Quit Rate

U.S. Nonfarm Private Sector Job Growth, 000’s

May 2010

Nov 2013

Source: BLS

Jobless Claims

Jul 2009

Sep 2011

Sep 2009

Dec 2007

Job Openings

Source: Cassidy Turley Research; BLS

Initial Claims (ths.)

Aug 2011

Office Vacancy Rate

Mar 2006

Jun 2004

Q4 13

Q3 12

Q3 11

Q3 10

Q4 09

Unemployment Rate

Dec 2000

15%

7.0%

Sep 2002

1.5

Source: BLS

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U.S. Research • Rebecca Rockey, Economist • Kevin Thorpe, Chief Economist • Tel: 202.463.2100

Cassidy Turley - U.S. EMPLOYMENT TRACKER February 2014  

Cassidy Turley is a leading commercial real estate services provider with more than 4,000 professionals in more than 60 offices nationwide....